|The Federal Deposit Insurance Corporation has agreed to pay nearly $0.1 billion over allegations it refused to repurchase more than 1,000 defaulted subprime mortgages originated by a failed Illinois bank that it took over.
A lawsuit originally filed in U.S. District Court for the District of Columbia on Oct. 31, 2002, by Beal Bank, S.S.B., against the FDIC has been dismissed, according to a court filing.
An FDIC spokesman confirmed in a statement to MortgageDaily.com that the agency settled with Beal for $90 million.
A spokesman for Plano, Texas-based Beal didn't respond to a request for information.
The lawsuit centered around Beal's acquisition of a 5,000-plus loan portfolio from the FDIC in 2001 and 2002. The loans were inherited when the bank insurer became conservator of failed Superior Federal Bank.
During Superior's conservatorship, the FDIC continued to operate its subprime department -- allegedly making hundreds of loans at terms the FDIC itself usually deems predatory.
Beal claimed that the FDIC reneged on a promise to repurchase the loans as defaults accelerated.
FDIC Fighting Subprime Repurchases
A pending federal lawsuit seeks to force the Federal Deposit Insurance Corporation to repurchase more than 1,000 subprime mortgages that have defaulted since they were acquired by a Texas-based bank more than five years ago. The loans were originated by a failed Illinois bank.
Beal Bank, S.S.B. v. Federal Deposit Insurance Corporation
No. 1:02-CV-02146 (U.S. District Court for the District of Columbia)